The federal government, on Tuesday,
announced a top management team to manage the country's sovereign wealth
fund, a move which analyst believed would steer oil revenues into
longer-term investment, announcing a top management team for its new
sovereign wealth fund.
Finance Minister Ngozi
Okonjo-Iweala said the fund would start with a cash hoard of around $1
billion. The top team will come from First Bank and UBS.
Nigeria is one of only three OPEC member
states that do not have an SWF, and the new fund is being keenly
watched by global markets and investors in Africa's second biggest
economy.
The government hopes the fund will
provide a firmer legal basis to ring-fence Nigeria's savings from
competing demands so it can better save when oil prices are high.
Sovereign wealth funds are essentially
government-run investment portfolios that buy into anything from
mainstream assets such as stocks and bonds to direct foreign investment.
Nigeria, Africa's top energy producer,
pumps over 2 million barrels of oil a day but has frittered much of it
away over the years on government wages, other recurrent spending and
corruption, ills that Okonjo-Iweala quit her World Bank job to come back
and tackle.
Auditor and consultancy firm KPMG helped hire the SWF board.
Mahey Rasheed, a member of the board of
First Bank, was chosen as the chairman of the fund team with UBS
executive and former JP Morgan head Uche Orji chosen as the managing
director and chief executive officer.
Okonjo-Iweala said she hoped by the end
of the year the team would lay out plans for the $1 billion but did not
say when investments would start.
The SWF has three main aims: saving
money for future generations, funding infrastructure and defending the
economy against commodity price shocks.
"I think the sovereign wealth fund will make Nigeria more attractive for investors," Okonjo-Iweala told reporters.
She said she hoped more money would be
paid in later, adding that 20 percent of the fund would go to each of
its three targets and the board would decide how to invest the other 40
percent.
President Goodluck Jonathan signed a
bill into law in May last year authorising the SWF, but powerful state
governors originally blocked the fund, saying it was unconstitutional.
They later agreed to it going ahead,
albeit with an initial limit of $1 billion, a fraction of the $7 billion
savings that are in Nigeria's Excess Crude Account (ECA).
Many state governors fear the SWF will mean less money for them to spend than the current ECA system for saving oil cash.
"The battle was long but I think the country stands to gain and I think it was worth it," Okonjo-Iweala said on Tuesday.
The SWF is meant to replace the ECA
eventually but Okonjo-Iweala told Reuters last week the two will run
side-by-side until people get comfortable with the SWF.
Critics say the ECA is opaque and can be too easily used.
The account contained $20 billion in
2007 but fell to $3 billion after a presidential election last year,
despite five years of high oil prices. It has since risen to $7 billion.
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